Big Banks vs. Community Banks and Credit Unions

Vocabulary terms and definitions based on the lecture covering the criticisms of large commercial banks alongside the benefits and limitations of community banks, online banks, and credit unions.

Wells Fargo

A major bank that admitted in 2016 to creating 3.5 million fake accounts to collect fees and charging over 570,000 customers for unneeded auto insurance, causing over 20,000 defaults.

Bank of America

A big bank that received tens of billions of dollars in bail-out funds in 2009 and paid $35 billion in executive bonuses the following year.

7th circle of hell

The realm in Dante's 14th-century poetry where money-lenders were placed, situated below violent murderers and blasphemers.

Local community bank

A banking institution that offers lower fees than national chains, avoids risky Wall Street bets, and reinvests money to support local hometown projects, businesses, and jobs.

ICBA

An organization with a website that allows consumers to locate community banks across more than 52,000 locations nationwide.

Online-based banks

Banks without physical locations—such as SIMPLE and CHIME—that offer lower fees due to lacking brick-and-mortar expenses, no account minimums, no overdraft fees, and fee-free ATMs at over 30,000 locations.

FDIC protection

Deposit insurance provided by local and online banks that covers up to $250,000 worth of deposits per person and account type.

Credit union

A non-profit financial institution where depositors are members and part owners, returning profits back in the form of reduced fees, higher savings rates, and better loan terms.

Members

The term used for credit union account holders, reflecting that they are part owners who typically share a common bond, such as geography, industry, or university affiliation.

NCUSIF

The entity that provides credit unions with deposit protection equivalent to FDIC coverage.

Shared-branch network

A nationwide cooperative network allowing members of one credit union to perform banking transactions at thousands of other participating credit unions as if they were their own.

International banking and lending

Financial capabilities, including cross-border loans and overseas withdrawals, that represent a key operational advantage of large national banks over smaller community banks and credit unions.